The report found that Latin America will need around $150 billion per year in clean energy investment—compared with $75 billion today—to be able to bring about an orderly energy transition, Birol said during the November 8 virtual launch of the Latin America Energy Outlook. “This is definitely within reach,” he added, “because the potential is huge.”
Birol noted that the region has a relatively low carbon footprint, a wealth of critical mineral resources, and the opportunity for major expansion of renewable energy, along with other advantages such as democratic governments and the rule of law. With the right policies in place, he said, “the investment will flow and double the current numbers.”
The transition to clean energy in Latin America would be good not just for the countries but for the global economy, said Birol, who called for support in this effort from international organizations and countries outside the region. He also stressed the importance of regional cooperation, as countries seek to meet their climate and energy goals.
The IEA report presents energy data and projections for 33 countries in Latin America and the Caribbean, though its analysis focuses on Latin America. It notes that the Caribbean countries, which account for about 5% of the region’s total energy needs, face “unique energy challenges related to location.”
In his remarks at the launch of the report, Birol stressed the importance of Latin America as a source of many of the critical minerals that are essential to the global energy transition, such as lithium, copper, silver, graphite, and nickel. “Of course, to have the potential is something, to benefit from it economically is something else,” he said.
Instead of simply exporting raw material, countries with deposits of critical minerals should explore opportunities to process and refine them domestically, in order to add more value to the local economy, Birol said. Latin American countries have an edge in this regard, he added, since their cleaner electricity grids will make the carbon footprint for processing very low.
In fact, according to the report, Latin America already has one of the cleanest electricity sectors in the world, with just over 60% of the supply coming from renewables, mainly hydropower, and the potential for much higher wind and solar energy production. The region’s current per-capita carbon footprint is about half the global average; only Africa has lower emissions.
Latin America’s abundant renewable resources will also give the region an advantage as countries seek to produce clean, low-cost hydrogen, according to Birol.
He also talked about the potential for increased oil production. “Even though we are seeing a transition to clean energy, we are also aware of the fact that oil and gas will be with us for years to come,” he said.
The report points to surging oil production in Guyana and Brazil, which it says are two of the top-three countries in the world (behind only the United States) with the largest expected increases in net oil exports to 2035.
At the launch event, lead author Stéphanie Bouckaert said that if Latin American countries meet their pledges to reduce their own fossil fuel consumption, the region could increase net oil exports by some 2 million barrels per day, which “would offer some diversification benefits to the global oil supply.”
“However, any new projects would face major commercial risks if the world is on track to deliver net zero emissions by 2050, as oil demand declines rapidly in this scenario,” she said.
The IEA decided to do a comprehensive analysis of the Latin American region because clean energy transitions are moving faster than expected all around the world and the agency believes the region is poised to benefit “immensely,” Birol said.
“Latin America has a major opportunity at its fingertips,” he said. Many governments in the region are making clean energy and climate action priorities, he said, and the IEA thought a report of this nature would provide timely input as they shape their policies and strategies.
“The transition to clean energy needs to be an orderly one,” Birol said, adding that countries cannot expect to shift their economies from oil and gas to clean energy from one day to the next. The transition must also be fair and equitable so that all segments of the population benefit, he said.
The Latin America Energy Outlook took about a year to put together, according to Birol. He said the process benefited from workshops in the region and consultations with governments, industry, nongovernmental organizations, and academia.
The report also received support from several organizations, including the Inter-American Development Bank (IDB), the Latin American Energy Organization (OLADE), and the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). Representatives of those organizations made brief remarks from South America during the launch of the report.
The International Energy Agency was founded in 1974—in response to the oil crisis of that era—to ensure the security of oil supplies. Based in Paris, it is an autonomous, inter-governmental organization within the framework of the Organisation for Economic Co-operation and Development (OECD). Over the years, it has expanded its original mission to focus not only on energy security but also on clean energy technology and energy efficiency, among other areas.
Under the leadership of Birol, a Turkish economist who has headed the IEA since 2015, the agency has also strengthened its engagement with emerging economies, according to the IEA website. Mexico became the first Latin American country to become a member, in 2018, while Chile and Colombia are in the process of seeking full membership. Argentina and Brazil are also considered part of the IEA “family” through the agency’s association program, which allows the organization to deepen cooperation with a broader number of countries.